Consorcio Ara SAB, Mexico’s best-performing homebuilder in 2013, posted its first weekly drop this month amid concern that President Enrique Pena Nieto’s proposed tax changes will reduce sales.
Ara fell 3.5 percent to 5.52 pesos at the close in Mexico City, pushing its decline since Sept. 13 to 4 percent. The country’s Habita Index of homebuilders sank 2.7 percent today and is down 3.3 percent this week.
Pena Nieto is proposing a new value-added tax on home sales, mortgages and rents that Credit Suisse Group AG estimates would reduce the purchasing power of potential buyers by about 28 percent. The levy is included in a package of legislation he sent to Congress on Sept. 8 as part of an effort to increase tax revenue and lessen dependence on oil income.
Passage of the new taxes would be a “negative catalyst” for the entire homebuilding industry, Credit Suisse analysts Eugenio Amador and Julian Bravo Lozano wrote in a research note e-mailed late yesterday. Lawmakers will probably amend Pena Nieto’s bill before approving the changes because as written they would be “so detrimental to the sector,” the analysts wrote.
Mexico’s biggest homebuilders -- Desarrolladora Homex SAB, Corp. Geo SAB and Urbi Desarrollos Urbanos SAB -- are already preparing to restructure debt after their cash balances plummeted. Geo and Urbi have been suspended from Mexican stock-exchange trading for failing to file second-quarter results. Homex fell 0.4 percent today, pushing this week’s drop to 1.3 percent.